Why millions of prescriptions will no longer be filled at Walgreens

by Sarah Varney | Kaiser Health News

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Starting this year, many Americans may be surprised to find that their local Walgreens or Duane Reade is no longer in their insurance network. hawaii/Flickr

Starting this year, many Americans may be surprised to find that their local Walgreens or Duane Reade is no longer in their insurance network. That's because of a dispute between two health care giants. If the back of your insurance card says Express Scripts, you are affected.

Starting this year, many Americans may be surprised to find that their local Walgreens pharmacy is no longer in their network. That's because of a contract dispute between the nation's largest drugstore chain and a company that manages prescriptions for health insurance companies.

To figure out if you're affected by the fight, look on the back of your insurance card. If it says Express Scripts, you can no longer fill your prescription at Walgreens or its affiliates like Duane Reade under your insurance plan.

Express Scripts is one of the nation's largest pharmacy benefit managers. These are companies that health insurers and others hire to negotiate prices for drugs and oversee prescription drug programs. Express Scripts' clients include the insurance giant WellPoint.

Express Scripts had been negotiating a new contract to keep Walgreens in its network. But Express Scripts spokesman Brian Henry says the pharmacy chain was asking for too much money.

"Their rates and terms would be as much as 20 percent more," Henry says, "and our clients aren't willing to pay that premium for basically the same service you can get at many other thousands of our pharmacies."

That's a charge that Walgreens adamantly denies. "We did not propose any increase in our rates," says Michael Polzin, a spokesman for the drugstore chain. "So there would not be any significant savings to Express Scripts clients for excluding Walgreens from their network. So it's really a situation of all pain and no gain for their clients."

Why can the companies just get along? Sean Brandle, a pharmacy benefits consultant at the Segal Company, a New York-based employer benefits firm, says tussles between pharmacy chains and pharmacy benefit managers are pretty typical.

"There's like this dance, and at the end of it, normally what you expect is that some kind of deal is going to be struck," he says. "But I guess in this instance, it looks like they were just too far apart."

Brandle says he's surprised Walgreens would walk away from so many pharmacy customers and all that in-store foot traffic. Express Scripts says of the 750 million prescriptions it processed last year, about 90 million were filled at Walgreens.

Caught in the middle of this dispute is one of the nation's largest health insurance companies, WellPoint, and millions of its customers, like San Francisco resident David Forer. There's a Walgreens just down the street from his office, and he used to stop in weekly to pick up insulin for his daughter, who has Type 1 diabetes.

"They knew me on a first-name basis," Forer says, adding, "They would ask how she was doing. And now I can't go there anymore."

Forer has switched his family's prescriptions to a CVS pharmacy. But while CVS is a national chain, it doesn't have nearly as many stores in San Francisco as Walgreens does.

"I imagine there will be huge line ups," Forer says, "because there are very few CVSes, and so many people are going to have to switch to CVS. So this is a major inconvenience."

WellPoint says nationwide, there's another in-network pharmacy typically within a half -mile of a Walgreens. The insurer is trying to help its customers make the transition.

Pharmacy benefits consultant Brandle says there could be an upside to all the hassle. Brandle says Express Scripts should be able to negotiate steeper discounts with CVS and other pharmacies, since excluding Walgreens will mean more business for them.

This story by Sarah Varney is part of a reporting partnership that includes KQED, NPR and Kaiser Health News.